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June 4, 2010

QUICK SUCCESS SERIES an initiative of SBLC Deoghar to facilitate the preparation of promotion seeking personnel of our Bank, appears to have succeeded in its objective to a large extent as the readers are still approaching us for its revision/updation despite availability of plenty of other study materials. We would not have been able to sustain this unique effort of ours, without the active support and continuous encouragement of our DGM cum Circle Development officer Sri Bijayananda Padhi. We are deeply indebted to him for his co-operation and guidance. Sri Kumar Priyank, Chief Manager (Training), Sri J K Arun, Manager (Training) and Sri S K Sharma, Manager (Training) at this SBLC have owned up this project and have taken pains to keep it relevant to the users by updating & improving it. Though every care has been taken while updating the contents, we request our readers to point out any lapses at the earliest. Needless to mention that this book is not a substitute of circular instructions issued by the Bank from time to time. For detailed guidelines please refer to Bank’s latest circulars. Soft copy of this edition is available on our ftp://10.151.51.33 in QSS folder and on SBI TIMES>PATNA CIRCLE>SBLC Deoghar site. Team SBLC Deoghar is humbled by the response and recognition, it is receiving from readers within and beyond the circle. Our Team wishes the readers grand success in their endeavors.

Kumar Umeshwar Singh Assistant General Manager, State Bank Learning Centre, Deoghar- 814112 Phone- 06432-232895 Fax - 06432-231810 E-mail: [email protected]

Quick Success Series

Updated By: Kumar Priyank Chief Manager Training, SBLC Deoghar Mobile- 7321805713 e-Mail- [email protected]

UPDATED UP TO NOVEMBER, 2017)

Accounting System & General Instructions

ftp://10.151.51.33/

Quick Success Series- Accounting System & General Instructions

NOVEMBER, 2017

MARGINAL COST OF FUNDS BASED LENDING RATE (MCLR) : INTRODUCTION OF NEW LENDING RATE SYSTEM (e-cir 1487 dt 05/03/2016) As per RBI notification, all rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 will be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark for such purposes. Actual lending rates will be determined by adding the components of spread to the MCLR. Accordingly, there will be no lending below the MCLR of a particular maturity for all loans linked to that benchmark. The actual rates, pertaining to different maturities under this dispensation will be advised separately. Following categories of loans are exempted from being linked to MCLR as the benchmark for determining interest rate: i. Loans covered by schemes specially formulated by Government of India where under banks are required to charge interest rates as per the scheme. ii. Working Capital Term Loan (WCTL), Funded Interest Term Loan (FITL), etc. granted as part of rectification/restructuring packages. iii. Loans granted under various refinance schemes formulated by Government of India or any Government Undertakings wherein banks charge interest at the rates prescribed under the schemes to the extent refinance is available. However, interest rate charged on the part not covered under refinance should adhere to the MCLR guidelines. iv. The following categories of loans can be priced without being linked to MCLR as the benchmark for determining interest rate: (a) Advances to banks’ depositors against their own deposits. (b) Advances to banks’ own employees including retired employees. (c) Advances granted to the Chief Executive Officer / Whole Time Directors. (d) Loans linked to a market determined external benchmark.

(e) Fixed rate loans granted by banks. However, in case of hybrid loans where the interest rates are partly fixed and partly floating, interest rate on the floating portion should adhere to the MCLR guidelines. 2. Fixed rate loan means a loan on which the interest rate is fixed for the entire tenor of the loan and Floating rate loans means a loan on which interest rate does not remain fixed during the tenor of the loan. 3. Base rate linked loans (other than those exempted above), cannot be opened on and after 01.04.2016. Therefore, for all recent/current sanctions and even those likely to be considered and approved before 31.03.2016, the branches/ Operating Units should open loan accounts in CBS, with Base Rate linked pricing, before 31.03.2016. MCLR is presently been quoted in Seven slabs. These are i)Overnight ii)One-month iii)Three month iv)Six month v)One Year vi) Two Year vii) Three Year MRFTP ▪ Market Related Fund Transfer Price Mechanism (MRFTP) is applicable to Branches only. ▪ IT is an internal measurement designed to assess the financial impact of uses and sources of funds and can be used to evaluate the profitability. ▪ It is a scientific internal funds transfer price mechanism evolved to supplement Asset Liability management. ▪ Under this system different weightages are attached to the normal interest rates of deposits and advances. ▪ It is a system under which the market is scanned on a daily basis to arrive at TP Bid rates & TP Offer rate. ▪ TP Bid rate means Central Office Interest Receivable on Deposits. ▪ TP offer rate means Central Office Interest Payable on advances. ▪ For detailed pricing, e-cir dt 11/06/2014 and e-cir dt. 20/08/2015 to be referred.


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USROMD A/c

▪ Returnable Deposits made with public

utilities or advances made in respect of houses taken under bank lease are paid by debit to USROMD A/C (Utility Services, Rental & Other Miscellaneous Deposits A/C) Rationale: To ensure effective control over these long term deposits so that these may be recovered when the occasion arises ▪ Telex Deposit/OYT Deposit for telephones are debited to Charges A/C (Telephone/Telex) Rationale: These are allowed as revenue expenses by the IT Department (Chapter 5, Volume 1, Book of Instruction) Office Account ▪ Debits in Income A/cs should be authorized by

Branch Head. ▪ Debits in Sundry Deposits should be

authorized by Branch Head. ▪ Both Debit & Credit in Suspense A/c should be

authorized by Branch Head. ▪ Items which cannot be classified immediately

and debited to their respective accounts are placed in SUSPENSE A/C

▪ Period by which entries relating to Advances availed towards TA Bills are to be reversed : 30 days from the date of completion of journey

▪ Rate of interest to be charged , if the T.A. bill is not submitted by the staff within 30 days after returning from the journey : As applicable to clean OD from the date of Advance

▪ The Amount of credit which cannot be appropriated to a particular account is credited to Sundry Deposit Account

▪ Reversal of entry Pertaining to Excess Found in cash can be authorized by Branch Manager or Controlling Authority as per discretionary powers

▪ Recoveries made from officials for providing residential accommodation is credited to Charges Account (Other Rent)

▪ Bankers Cheques (Prepared by debiting charges Account only) outstanding for more

than 3 years are credited to Charges Account (Sundries)

▪ Every Year Expenses on account of Training of all the branch staff is transferred to LHO on 28th/29th Feb

▪ Recoveries made on account of written off accounts are credited to Charges Account (Recovery from written off Account)

▪ Periodicity of balancing of Stamp is monthly. ▪ Yearly entry relating to staff welfare fund is

passed on 28th/29th Feb

ISSUE OF DUPLICATE IOI (DRAFTS)- WAIVER OF SURETIES FOR ISSUEING A DUPLICATE IOI (Draft) (e-cir 707 dt 25/09/2013) Production of sureties may not be insisted upon while obtaining indemnity for issuance of a duplicate IOI (Draft) where the amount of IOI (Draft) is up to Rs.1, 00,000/- if the applicant (purchaser) of a IOI (Draft) is considered good for the amount involved. Earlier this limit was Rs.50000/-. INTER OFFICE INSTRUMENT (IOI) : ISSUE OF DUPLICATE IOI-DRAFTS-DISCONTINUANCE OF NON PAYMENT ADVICE (e-cir 467 dt 06/08/2017) In this connection, we advise that it has been decided by the appropriate authority to dispense with the requirement of receipt of “Non-payment advice” from the drawee branch at the time of issuing a duplicate IOI (draft), as the payment status of an IOI (Draft) i.e., whether already paid or outstanding, can be viewed in CBS by the issuing branch.

Custody of Documents ▪ Power of Attorneys are entered in Power of Attorney Register ▪ LIC Policy given as security for Overdrafts are entered in Miscellaneous Security Register ▪ TDRs given as security for DL/OD are entered in Deposit Receipt Joint Custody Register ▪ Death Certificates, Succession Certificates, Letters of Administration, Probates, Court orders appointing receivers for Property are entered in Sundry Documents Register


NOVEMBER, 2017

▪ Check signals, cypher code, etc are entered in Branch Document Register ▪ Licenses, Retention Limits, Insurance, Title Deed related to Bank’s Property, lease agreement, etc are entered in Branch Document Register ▪ Indemnity Bonds are entered in Branch Document Register ▪ Branch Document Register has seven sections. ▪ When the unused cheque leaves are not surrendered, the details should be entered in Lost Document Register. (Chapter 2, Vol 1, Book of Instruction)

Rationalisation of Registers maintained at Branches / CPCs (e-cir 1325 dt 30/01/16)

▪ 72 registers shall be compulsorily maintained for the purpose of Audit by Branches (both BPR & non-BPR)/ CPCs, as applicable. ▪ 121 registers shall be maintained by Branches/CPCs as applicable, as per there requirements/usage i.e. these registers will be used as per operational requirement of branches/CPCs. Protective Arrangement ▪ License for Gun at the Branch is obtained in the name of Branch Manager ▪ Bank Guard’s name is entered in Gun License as Retainer ▪ Details of Cartridges are available in Gun History Book ▪ In case of sudden incapacitation of Branch Manager emergency arrangements are reviewed at Yearly interval ▪ Disaster Recovery Plan (DRP) and Business Continuity Plan (BCP) is prepared in the first week of January every year and is approved by the controlling authority. January ▪ DRP & BCP are kept as Branch Document register.

TAX BENEFIT ON ADDITIONAL INVESTMENT OF RS.50,000/-UNDER NPS (e-cir 1572 dt 28/03/2016) In the Finance Act, 2015, an additional tax benefit has been made available whereby any NPS

subscriber can get additional tax deduction on investment upto Rs.50,000/- under a new Section 80 CCD (1B) of Income Tax Act. This is an exclusive tax benefit available only for contribution under National Pension System (NPS). This additional tax deduction on investment up to Rs.50,000/- provides an opportunity not only to those employees who are mandatorily covered under NPS but also to all citizens of India including employees who are covered under old defined benefit Pension Scheme/ Provident Fund/ Superannuation Fund, to avail of this tax benefit by opening an NPS account on an individual basis and by investing upto Rs.50,000/- per annum. TAX DEDUCTED AT SOURCE (TDS) ON CERTAIN PAYMENTS BY THE BANK FINANCIAL YEAR 201718 (e-cir 231 dt 02/06/2017) MAJOR CHANGES The major changes pertaining to TDS (applicable w.e.f. 1st June 2017) are as below:

I. Under Section 194J Tax is deducted at source at the rate of 10% on any sum payable to a resident by way of fees for professional services or fees for technical services provided that the sum is paid/payable or aggregate sum paid/payable in a financial year exceeds Rs.30,000/. With effect from 1st June, 2017 any payment in nature of professional fees or fees for technical services paid to a person engaged in business of operation of call centre will be eligible for concessional TDS rate of 2%, other payments would continue to attract TDS rate of 10%. ii. Under Section 194LC, TDS on interest payable to a nonresident on borrowings made in foreign currency from sources outside India under a loan agreement or by way of issue of any long term bond shall be eligible for concessional TDS of 5%. Concessional TDS rate under this section was eligible for borrowings made up to 1st July, 2017, which is now extended up to 1st July, 2020. Further also, benefit of lower TDS rate is extended to rupee denominated bonds. iii. Under Section 194LD, TDS on interest payable to FIIs and QFIs on their investments in Government securities and rupee denominated Corporate bonds shall be eligible for concessional rate of 5% TDS, provided that the rate of interest


NOVEMBER, 2017

does not exceed the rate notified by the Central Government in this behalf. Concessional TDS rate under this section was eligible on interest payable at any time on or after 1st June, 2013 but before the 1st July, 2017, which is now extended up to 1st July, 2020. Major payments made by Bank where TDS is applicable:- (e-cir 231 dt 02/06/2017) Following payments made by the Bank are subjected to Tax Deduction at Source (TDS) under the stipulated sections of Income Tax Act mentioned there against:- i. Interest on securities [Section 193]; ii. Interest other than Interest on securities [Section 194A]; iii. Payment/ Credit to Contractors/sub- Contractors [Section 194C]; iv. Commission, brokerage etc. [Section 194 H]; v. Rent [Section 194 I]; vi. Fees for professional or technical services or royalty [Section 194J]; vii. Transfer of immovable property [Section 194IA]; viii. Interest [other than NRE/FCNR Ac] & any other payments made to nonresidents, which are taxable under Income Tax Act [Section 195]; ix. Any other payments liable for TDS.

Importance of Permanent Account Number (PAN): (e-cir 231 dt 02/06/2017) Under Section 206AA of the Income Tax Act, the rate of TDS is higher of 20% or the applicable rate in all cases where valid PAN is not quoted by the recipient [except on payment of interest under section 194LC or to nonresidents not being a company or foreign company, subject to prescribed conditions (as may be notified by Income Tax department)]. Further, the declaration filed in 15G and 15H is not valid unless the person filing the declaration furnishes his valid PAN in such declaration. Therefore, branches should make extra efforts in persuading the customers to provide their PAN. Form 15G/15H: (e-cir 557 dt 11/08/2017)

SUBMISSION OF FORM 15G / FORM 15 H AT ANY BRANCH i. Individual (of less than 60 years of age) or a person (not being a Company or Firm), who is resident in India and can request the Bank not to deduct tax at source on interest Paid/payable on time deposits by furnishing a declaration in Form 15G to the effect that the tax on their estimated total income of the relevant financial year will be Nil. However, the declaration in Form 15G is not applicable if the amount of the income (individually or in aggregate) credited or paid or likely to be credited or paid during the concerned financial year in which such income is to be included exceeds the maximum amount which is not chargeable to tax (Rs.2,50,000/- for F.Y. 2017-18). ii. Resident senior citizen person (60 years or more anytime during the previous year) can furnish similar undertaking in Form 15H (certifying that his estimated taxable income is below the maximum amount which is not chargeable to tax and tax thereon would be NIL), irrespective of the interest amount and rent amount paid or credited or likely to be paid or credited during the financial year. In this regard, it is to be noted that a customer would need to provide the details of all of his/her time deposits with Bank in Form 15G/H. The declaration is to be given at the time of a. change of financial year b. Making a new time deposit inclusive of auto renewal. The declaration given in the Form is valid for a financial year. The onus of intimating change in any particulars provided in the form is on the depositor and not on the bank. iii. Further, the declaration filed in 15G / 15H is not valid unless the person furnishes valid PAN in such declaration. At present, a depositor has to submit the Form 15G/H at the home branch or where the fixed deposit(s) are maintained. For customer convenience, submission of Form 15G/15 H at any branch: home/non home branch is now enabled in CBS. Accordingly, the customer can submit Form 15G/H at any of the branches. Consequences for noncompliance of TDS provisions: (e-cir 231 dt 02/06/2017)


NOVEMBER, 2017

We have to reiterate that noncompliance with TDS requirements provided in the IT Act is subject to severe penalties. Some of the major interest, fees and penalties are as below: I. In case of failure to deduct whole or part of TDS, the deductor is liable to pay simple interest @ 1% under section 201(1A) for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further, the deductor may be liable for penalty of sum equal to the amount of tax, which has been failed to be deducted. ii. In case of failure to deposit whole or part of TDS in Govt. account after deduction, the deductor is liable to pay interest @ 1.5% under section 201(1A) for every month or part of the month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Further, a person who fails to pay tax to the credit of the Central Government may be liable for prosecution u/s.276B. Interest on Securities (Sec 193) Interest on 8% Savings (Taxable) Bonds, 2003 exceeding Rs 10,000/- : 10% Interest other than Interest on securities (Sec 194A) Interest on Term Deposits [including RD] exceeding Rs.10,000/- per person for Bank as a whole in a financial year- : 10% Payment to Contractors (194 C) Where a single contract payment exceeds Rs.30,000/- or in cases where the aggregate amt of such payments credited or paid or likely to be credited or paid during the financial year (including advances if any) exceeds Rs.1,00,000/-. TDS is required to be made on payment or credit to: a) Individual/ HUF : 1% b) Other than Individual/ HUF: 2%

* In case, Payee - transporter submits a declaration in prescribed form along with PAN stating that he is covered under section 44AE and no tax is required to be deducted.

Commission or Brokerage (Sec 194 H) When such commission or brokerage exceeds Rs 15,000/- in a FY- : 5%

Rent (Sec 194 I) When rent in a financial year exceeds Rs 1, 80,000/- (including advances if any) a) Rent of Machinery, Plant & Equipment : 2% b) Rent of others viz. land, building, furniture

and fittings etc. : 10%

Transfer of immovable property (Sec 194-IA) When consideration on acquisition of immovable property from a resident transferor ((other than rural agricultural land) equal to or more than Rs. 50, 00,000/-): 1% Fees for Professional or Technical Services or royalty (Sec 194 J) When such fees in a financial year exceeds Rs.30, 000/- : 10% Remuneration / fees / commission payable to director (not being in the nature of salary) - No threshold limit for TDS on such payments: 10% Payee engaged only in the business of operation of Call Centre (w.e.f 01.06.2017): 2% Due Date of Deposit of TDS (e-cir 1640dt 02/05/2016) The due date of deposit of TDS is on or before 7 days from the end of the month. Due Date for filing TDS statement: (24Q-Salary, 26Q-Non Salary and 27Q-NRI) Quarter ending date Due date for filing Ret. 30th June 31st July 30th Sep 31st October 31st Dec 31st January 31st Mar 31st May Challan cum statement for deduction made u/s 194-IA on transfer of immovable property (26QB)-PERIOD Monthly- 30 days from end of the month. DUEDATE FOR ISSUANCE OF FORM 16 (TDS on Salary) AND 16A (TDS other than Salary): Period (Form 16) Due Date


NOVEMBER, 2017

Year ended 31st March 31st May Period (Form 16A) Due Date Quarter ended 30th June 15th Aug Quarter ended 30th Sep 15th Nov Quarter ended 31st Dec 15th Feb Quarter ended 31st March 15th June DUE DATE FOR QUARTERLY UPLOADING OF FORM 15G/H DECLARATIONS (e-cir 344 dt 14/06/2016) Date of ending Due date of the quarter 30th June 15th July of the FY 30th Sep 15th Oct of the FY 31st Dec 15th Jan of the FY 31st March 30th April of the FY immediately

following the FY in which declaration is made

TDS Provisions : FY 2017-18 ( e-cir 231 DT 02/06/2017)

Salary (Sec 192) Income Tax (%) Up to 2, 50,000/- Nil Rs 2, 50,001-Rs 5, 00,000 05% Rs 5, 00,001-Rs10, 00,000 20% Rs 10, 00,001 onwards 30% Education cess (inc higher education cess) 3 %

For Resident Woman- No difference with general rate.

For Senior Citizens (persons of age 60 years or more but below 80 years): No Tax up to Rs 3, 00,000/-, after that normal rates.

For Senior Citizens (persons of age 80 years and above): No Tax up to Rs 5, 00,000/-, after that normal rates.

Surcharge is applicable at the rate of 10% (ten percent) of such income-tax in case of a person having a total income exceeding fifty lakh rupees but not exceeding one crore rupees. Whereas in case of a person having a total income exceeding one crore rupees, surcharge at the rate of 15%

(fifteen percent) of such income tax would be applicable. ANALYSIS OF OTHER MISC INCOME COMMISSION ON EPFO/ESIC TRANSACTIONS A New BGL account has been opened as under to enable Branches to credit the commission earned on EPFO, ESIC and CMPFO transactions: BGL A/C No 4599137BBBBBC REVISION IN RATE OF INTEREST RATES FOR SMALL SAVINGS SCHEMES : RATE OF INTEREST WEF. 01.01.2018 TO 31.03.2018

Scheme Rate of Interest

5 Year SCSS, 2004 8.30% p.a

5 Year Monthly Income Account Scheme

7.30% p.a

5 Year NSC 7.60% p.a

PPF, 1968 7.60% p.a.

Kishan Vikas Patra 7.30% p.a. (Double in 118 Months)

Sukanya Samriddhi Account Scheme

8.10% p.a.

Transaction in relation to which PAN is to be quoted or Form 60 is to be submitted by the transacting party (Rule 114B): (e-cir 1301 dt 21/01/2016) a) A time deposit, exceeding fifty thousand rupees or aggregating to more than five lakhs rupees during a financial year. b) Opening an account other than mentioned in above and a Basic Savings Bank Deposit account. c) Payment in cash for purchase of bank drafts or pay orders or banker’s cheques from a bank for an amount exceeding fifty thousand rupees during any one day. d) Deposit in cash exceeding fifty thousand rupees with a bank during any one day. e) Making an application to any bank for issue of credit or debit card.


NOVEMBER, 2017

f) Payment of an amount exceeding fifty thousand rupees to a company to acquire its debentures or bonds issued by it. g) Payment of an amount exceeding fifty thousand rupees to the Reserve Bank of India for acquiring bonds issued by it. h) Payment in cash of an amount exceeding fifty thousand rupees in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time. i) Sale or purchase of any immovable property exceeding ten lakhs rupees or valued by Stamp Valuation authority at an amount exceeding ten lakh rupees. j) Payment for one or more pre-paid payment instruments, to a banking company, in cash or by way of a bank draft or pay order or banker’s cheque of an amount aggregating to more than fifty thousand rupees in a financial year. k) Sale or purchase, of goods or services of any nature other than those specified above of this Table (if any) for amount exceeding two lakh rupees per transaction. l) Contract of value exceeding one lakh rupees for sale or purchase (other than shares) as defined in section 2 the Securities Contract (Regulation) Act, 1956. l) Sale or purchase of shares of company not listed on a recognized stock exchange for an amount exceeding one lakh rupees. (Provided that where a person, entering into any transaction referred to in this rule, is a minor and who does not have any income chargeable to income-tax, he shall quote the permanent account number of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction.) (Provided further that any person who does not have a permanent account number and who enters into any transaction specified in this rule,

he shall make a declaration in Form No.60 giving therein the particulars of such transaction.) Further, under current guidelines, the requirement of PAN or Form 60/61 is not applicable for non-residents and the Central Government, State Government and Consular Offices in transactions where, they are payers. The same exemptions are applicable to the Central Government, State Government and Consular Offices under revised guidelines also. However, under new guidelines, in case of nonresidents, only the transactions as mentioned in point no. (c), (e), (g), (h), (j) and (k)of the above table are exempted from such requirements of obtaining of PAN or Form 60. Definition of "Currency", 2015 (e-cir 1390 dt 11/02/2016) Debit cards, ATM cards or any other instrument which can be used to create a financial liability may be defined as currency. Post Office (Postal Orders/Money Orders), 2015 (e-cir 1391 dt 11/02/2016) General permission has been given to any person to buy foreign exchange from any post office in India in the form of postal order or money order. Facility in CBS to Inquire INB/ATM/SMS Registration Status of a Customer (e-cir 101 dt 26/04/2016). To enable the staff at branches to ascertain whether a particular customer has availed, ATM/INB, etc. facility or not and for supporting the efforts made by them for migrating customers to these low cost channels, a hot key ‘Ctrl+Shift+A’ has since been introduced in CBS. On pressing the hot key, a small window containing the status (Y/N) for INB, ATM and SMS facility is displayed on the CBS screen. OPERATIONS IN CURRENT ACCOUNT (e-cir 45 dt. 07/04/2016) i) AOFs of non Individual customers should continue to be maintained at the branches as


NOVEMBER, 2017

instructed by CPC Redesign & other Projects as AOFS of Non individual accounts (viz Private Ltd Companies, Govt. Accounts, Partnership Firms, and SHGs etc) take much more time for processing due to various documentation formalities and also branches receive requests for frequent changes in the authorized signatories. ii) Normally Branches should not issue contingent cheques. In case of extreme emergency, only those Branches having contingent cheque book in Valuable Paper Inventory System (VPIS) in CBS, should issue contingent cheque through CBS. iii) At non-home branches raising of debit in C/As should be allowed on the basis of cheques only. At non home branches raising of Debit in C/As through Letter of authority/ debit voucher should not be allowed. NON-HOME TRANSACTIONS (e-cir 90 dt 22/04/2016) Admissible transactions: a) Cash Deposit: ‘P’ Segment Cash Deposit: Max. Rs. 25, 000/- per day. SME Segment – Rs 2, 00,000/- per day. b) Cash Withdrawal: P Segment – Rs 50,000/- for self. SME Segment – Rs 1, 00,000/- for self. No cash payment to third parties. No cash payment of CAG/MCG/CMP cheques. c) Passbook Updation: Facility of Savings bank passbook updation at all non-home branches without any charge except PBBs, SPBBs, CAG, MCG and NRI branches throughout the country. d) Transfer: (i) The restrictions are not applicable to Multi City Cheques (MCC) which will be paid as per the ceiling prescribed for different segments. However, as System does not validate the ceilings prescribed for Multi City Cheques, these have to be monitored and controlled administratively by the branches. (ii) All intra-city Cheques will be allowed to be paid without upper limit from non- home branches as hitherto.

(iii) All transactions between same CIF, irrespective of mode of transaction will be allowed. (iv) All transactions through Rupee Vostro Account/ Dividend Warrant module will be allowed without ceiling as hitherto. Note: (i) There will be a general cap of Rs. 10 lacs in originating debits for non-home transactions for all branches and the special cap of Rs. 5 lacs will be imposed for branches manned by Single Officer and Single Clerk. (ii) All RTGS transactions will be restricted to home branches only. However RTGS remittances on behalf of other banks from their accounts maintained with us in capacity of clearing house settlements will be allowed with debit vouchers. In such circumstances all interbank RTGS transactions are enabled to be processed through R42 RTGS transaction module. (iii) All RTGS will be backed by cheque only. There will be no debit on the basis of debit voucher). However, to avoid any inconvenience to our customers and also to comply with RBI guidelines, following branches/ CPCs have been exempted from above restrictions and they will continue to undertake transactions as hitherto. However, non-home debit for RTGS will not be allowed by the System in any Branch including under noted exempted branches. (i) All CAG/ MCG/CMP enabled/ DGM/AGM headed branches.(ii) All BPR outfits including RACPCs and SMECCCs. (iii) All other arrangements already approved by respective Group Head in respect of special type of transactions such as Western Union, SBI card, Metal Gold Loan etc. (iv) All clearing CPCs including MICR & non-MICR centres, where Speed Clearing System is applicable as per RBI guidelines. Such Branches of Scale IV, III & II categories, which are specially identified and recommended by the Circle CGM, would be allowed to carry out RTGS transactions by debit voucher at Home Branch. Branches should however continue to accept Cheques drawn on other Branches of our Bank for above Rs. 10 lacs in all branches and above Rs. 5 lacs in branches manned by Single Officer and


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Single clerk, for collection of Cheques through SC/ DD automation module. COMPLIANCE AUDIT FALSE COMPLIANCE (e-cir 977 dt 26/11/2013) i) Penalty for false compliance would be proportionate to the number of false compliances observed in High / Medium / Low & Very Low Risks of the relevant RFIA as under: a) High & Medium Risk - 1 mark for each false compliance b) Low & Very Low Risk - 0.5 mark for each false compliance ii) The penalties of false compliances observed under “compliance audit” or during ensuing RFIA by the Inspecting Official are to be deducted from ensuing RFIA, as the compliances are submitted after RFIA and subsequent set of Branch Management has to ensure compliance to system and procedures. iii) In cases of branches not covered under Compliance Audit and where false compliances are observed during conduct of RFIA, if the auditee unit, during audit, has not rectified, IO will report the total no. of false compliances under each category along with details of each false compliance under SDRM 614. The ZIO/CAU will apply penalties for false compliance before final approval of RFIA score. iv) The maximum penalty has been kept at 50 marks. RISK FOCUSSED INTERNAL AUDIT (RFIA) INCENTIVE FOR EARLY CLOSURE OF AUDIT REPORTS (e-cir 124 dt 28/04/2016) Penalty to be imposed on account of False Compliance: (a) High Risk & Medium Risk Areas: 1 False Compliance: 10 marks, 2 False Compliances: 20 marks, => 3 False Compliances: 30 marks (b) Low & Very Low Risk Areas: 1 to 3 False Compliances: 10 marks, 4 to 5 False Compliances:

15 marks, > 5 False Compliances: 20 marks, Subject to (a) + (b) not exceeding 30 marks. Further, penalty as per e-Circular No. IMA/IMACA/6/2013-14 dated 26.11.2013 will continue. RISK FOCUSSED INTERNAL AUDIT (RFIA): DOCUMENTS NOT PRODUCED FOR VERIFICATION (e-cir 520 dt 18/07/2016) The competent authority has decided that: i) Documents not produced for verification in previous RFIA will form a part of sample in next RFIA. ii) There may be possibility of few such accounts getting closed during the intervening period. IOs will verify such closed accounts and if any major irregularity is found in such closed accounts which were not produced in previous RFIA and closed before current RFIA, he will mention them in detail in the Management Letter. iii) Further, if a branch is not able to produce the same document in next RFIA i.e. the documents of an account are not produced in two continuous audits, such account will be treated as Fraudulent Account and the IO will record his observations accordingly in RFIA Report. However, while taking a view in the matter, the IO will examine the following aspects before treating it as Fraudulent Account: a) Ascertain the end use of funds i.e. whether the debits in the accounts were properly utilized for the purpose for which the loan was sanctioned, and b) Source of credits, if any, in the account. RISK FOCUSSED INTERNAL AUDIT (RFIA) & CREDIT AUDIT : INCENTIVE FOR EARLY CLOSURE & PENALTY FOR FALSE COMPLIANCE (e-cir 1015 dt 03/11/2016) We refer to our Circular No. IMA/IMA-RFIA/6/2016-17 dated 26.09.2016 advising withdrawal of incentive for early closure of audit reports and its corresponding penalty in case of false compliance w.e.f. 01.10.2016, so that the branches focus on rectification of irregularities meaningfully rather than submit false compliance for the purpose of incentive score.


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Based on the requests made by few Circles, the implementation of withdrawal of early closure incentive was kept in abeyance. Subsequently, the issue has been deliberation upon, in detail, and it has now been decided to withdraw the early closure incentive for timely closure of audit reports and its corresponding penalty in the following manner: a. The early closure incentive will be withdrawn w.e.f. 1st November 2016. b. The branches, where RFIA is completed on or before 31.10.2016, will be eligible to be considered for incentive score, subject to submission of satisfactory compliance remarks, within the approved time frame. The branches where RFIA will be completed after 31.10.2016 will not be eligible for incentive score. c. The penalty for submission of false compliance remarks for the purpose of early closure incentive will continue for those branches, which have received the incentive scores in the RFIAs completed up to 31.10.2016, till the closure of their subsequent / next RFIA reports. d. However, the penalty for false compliance in terms of e Circular No. IMA/IMACA/6/2013-14 dated 26.11.2013 i.e. 1 mark for each High / Medium Risk and 0.50 mark for each Very Low / Low Risk area, subject to maximum of 50 marks, will continue to be applicable for all branches. Risk Focused Internal Audit (RFIA) Self-Audit in Modular Online Audit Report Processing System (e-cir 1168 dt 05/12/2016) Please refer to e-Circular No. IMA/IMA-RFIA/4/2016-17 dated 11/05/2016, wherein, detailed objectives of implementation of Modular Online Audit Report Processing System (ModOARPS) were advised. 2. With a view to bring uniformity and effectiveness in Self-Audit Assessment at Branches and validation by the Controllers, Self Audit functionality is rolled out in ModOARPS.

3. The Self Audit has been rolled out as part of single sign on application to ensure availability to authorized users. Branches have to login into Core Banking Portal to access Self Audit Module. Once the User enters the valid credentials for logging into CBS, User will be redirected to the home page of CBS Portal. On the home page of CBS Portal, User needs to click on “Apps” Icon to access “Self-Audit Module” and download the applicable Audit Report Format (ARF) for carrying out Self Audit. 4. Criteria for selection of ARF applicable to the branches are mentioned in Internal Audit Manual, which is available for view/download in I&MA Intranet Portal → Departments →AP&S. The branch, after completion of self audit needs to submit the Comparison Score Summary along with zip file of OARPS Self Audit directory, for vetting, to the controllers. 5. The Standard Operating Procedure (SOP) for Self Audit Module for guiding the branches has been uploaded in I&MA Intranet Portal, which will be available under Audit → RFIA → Self Audit. 6. Accordingly, w.e.f. 01.12.2016, the self-audit has to be carried out by the branches and validated by the Controllers only through self-audit modules of ModOARPS. Risk Focused Internal Audit Dashboard (e-cir 1629 dt 18/03/2017) In order to strengthen the Internal Audit by making it more risk focused and to ensure paperless compliance, Modular OARPS was implemented with the facility for online submission of the RFIA compliance remarks, from the Audit Cycle commenced from 1.4.2016. In the Risk Management Committee (NBG) meeting dated 23.9.2016, it was decided to make available a Dashboard to the Controllers/Branches containing critical findings of RFIA and position with regard to rectification / compliance on an ongoing and close to real-time basis. Accordingly, I&MA Department has developed a dashboard, available in ‘Statebanktimes’ w.e.f. 13.3.2017 with status available on T+1 day basis, Branch-wise, Controller-wise, Circle-wise etc.,


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covering movement of CRM/ORM scores, trends in ratings, compliance status, Critical and High Risk observations etc. Availability of the above details at one place should enable the Business Groups/Circles/Controllers to address the important issues highlighted in their area of operation and take steps to improve adherence to systems and procedures relating to various instructions of the Regulator as well as the Bank. The dashboard can be accessed as under: Statebanktimes>Departments-2>I&MA>Important Links>“RFIA Dashboard”. Risk Focussed Internal Audit (RFIA) - Review of Rating / Scoring buckets (e-cir 10 dt 01/04/2017) The existing as well as proposed Scoring / Rating buckets with ratings are as under:

Score Band Risk Rating Risk Assessment Level

Exist Rev Exist Rev

850 & above

No change

WC A Indicates Controls are operating effectively and in accordance with Management’s control objectives and no significant control weaknesses were noted

700 to 849

725 to 849

AC B Indicates certain Controls require improvement to ensure the overall control structure will continue to operate Effectively. Significant control weaknesses may exist, but compensating controls exist where weaknesses were noted.

550 to 699

650 to 724

MC C Indicates significant control weaknesses were noted in number of components or less significant weaknesses exist over the entire environment.

549 & below

649 & below

UC D Indicates an effective control structure has not been established or significant weaknesses in control have been noted across the control environment, including lack of both basic and compensating controls.

To inculcate the culture of 100% compliances with laid down system and procedure, especially in the areas of regulatory compliance, we propose to introduce a separate Zero Tolerance Module in RFIA. Accordingly, we have identified 20 Zero Tolerance Areas (ZTA), 10 in ORM and 10 in CRM for NBG Branches and 10 areas in ORM for MCG and CAG Branches with a penal score of 2 marks for each non-compliance, which will be reduced from the overall RFIA score of the Branch. ONE MORE WAS ADDED VIDE E-CIR 292 DT 21062017. The revised score band for risk ratings under RFIA and penal score for Zero Tolerance Areas (ZTAs) will be applicable for all the domestic branches, where RFIA will commence on or after 1st July 2017 ZERO TOLERANCE AREAS FOR NBG BRANCHES: I. CREDIT RISK MANAGEMENT: 1. Prescribed KYC documents of Borrower / Guarantor not held on record. 2. Pre-sanction inspection to the site / farm / unit / residence /business place of borrower / guarantor not done / not on record. 3. Physical verification of property not done and independent verification of valuation not carried out. 4. TVSR not obtained on Bank's standard format. 5. Scrutinized copy of Control Return for sanction not on record, even after three months from Date of Sanction. 6. Documents not produced for verification. 7. Mortgage of all properties stipulated in sanction not created. 8. Registration of EM with Central Registry (CERSAI) has not been done. 9. Registration of charge with RoC not done within the stipulated period. 10. Eligible accounts not covered under CGTMSE. II. OPERATIONAL RISK MANAGEMENT: 1. Risk categorization of customers into low, medium & high not done. 2. Account opening forms returned by LCPC for rectification not recorded in a Register and resubmitted after compliance. 3. KYC documents / Signature of the account opening functionaries not verified.


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4. Manual Intervention of Transactions in Interest Expenses & Income Accounts observed and proper records not maintained and approval not obtained. 5. Lapses in systems & procedures, relating to fraud/suspected fraud pointed out earlier, recurred. 6. Opening and maintaining of Parking Accounts without approval. 7. Transactions with value dates prior to transaction dates not approved by authorized official and monitored. 8. Back-up register not maintained for recording all entries passed manually through Interest Expense a/c and Interest Income a/c. All entries not scrutinized and authorized by the competent authority. 9. Locker access module in the CBS is not put into use. 10. Instances of Incorrect / False Certification observed. 11. Fraud on detection, Branches to report immediately to Controllers. Any deviation in reporting to Controllers (as per e-cir 292 dt 21/06/2017) Financial Inclusion: RuPay Card- Personal Accident Insurance (e-cir 189 dt 10/05/2016) Benefits of insurance will be available to the cardholders who have performed minimum one successful financial or non-financial transaction* at any channel both intra and inter-bank i.e. on-us and off-us (ATM/MicroATM/ POS/e-com/Business Correspondent of the bank at locations by any payment instrument) within 90 days prior to date of accident including accident date of Non-Premium cardholders. *Transaction types means all customer induced transaction at bank branch or by any payment instrument whether on-us (Bank Customer/RuPay card holder transacting at same bank channels) and / or off-us (Bank Customer / RuPay card holder transacting at other bank channels). EQUALISATION LEVY RULES, 2016 (e-cir 653 dt 19/08/2016) Government has recently introduced a special levy viz. Equalization Levy w.e.f. 1st June 2016. In

terms of the provision of Finance Act 2016, Bank is liable to deduct at the rate 6%, the equalization levy from the amount paid or payable to a non-resident in respect of the specified service provided by way of; (i) online advertisement, (ii) Any provision for digital advertising space or (iii) Any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government in this behalf. The equalization levy shall not be charged, where: (a) The non-resident providing the specified service has a permanent establishment in India and the specified service is effectively connected with such permanent establishment; (b) the aggregate amount of consideration for specified service received or receivable in a previous year by the non-resident from the Bank does not exceed one lakh rupees; or (c) Where payment for the specified service is not for the purposes of carrying out business or profession. LAUNCH OF INSURANCE CLAIM REPORTING SYSTEM (ICRS) (e-cir 897 dt 07/10/2016) With a view to create proper database of Bank’s Insurance claims and their proper follow up at various levels on the basis of MIS, a need has been felt to put in place an on-line reporting system of insurance claims lodged by branches/ offices. Accordingly, Online Insurance Claim Reporting System (ICRS) has been launched and the same is available at the following link: https://icrs.statebanktimes.in User manual detailing the ICRS portal is annexed to this Circular (Annexure-A) and is also available at State Bank Times > Department 1 > Banking Operations Department > Insurance. Business Correspondent (BC) Channel : Engagement of BCs and CSPs in the Bank Obtention of PAN / TAN / Aadhaar Number (e-cir 1045 dt 08/11/2016)

https://icrs.statebanktimes.in/


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At present, there is no unique identifier of CSP except KO code. With a view to bringing out unique identifier for all BCs / CSPs at induction level, it has been decided to introduce a mandatory field for creation of BC / KO code as under: a) For Individual BCs / CSPs of Entity BCs: Aadhaar / PAN b) For Entity BCs: TAN Accordingly, these fields have been made mandatory for KO code creation process and necessary IT development is in progress. In respect of existing BCs / CSPs the concerned circles will obtain Aadhaar / PAN / TAN details of BCs / CSPs and update them in Kiosk data. RULES FOR SPLITTING OF BULK DEPOSITS ACCEPTED UNDER DIFFERENITAL INTEREST RATE (DIR) (e-cir 1079 dt 18/11/2016) it has been observed that in a few cases, after obtaining DIR quotes for Bulk Deposits of Rs.100 Crores and above, Branches have split the amount and opened multiple Term Deposits. Thereafter, premature payment of some deposits has been allowed, thus reducing the remaining amount of Bulk Deposits to below the threshold limit of Rs.100 Crs for which DIR has been accepted. The appropriate authority has, therefore, approved as under to deal with the deposits accepted under DIR: a) Bulk Deposits under DIR can be split only in multiples of Rs.100 Crs and above. (Currently DIR is quoted for Bulk Deposits of Rs.100 Crs and above only). b) Such Bulk Deposits would be captured in the same CIF. c) In case of premature payment of such deposits, the interest payable would be i) Bulk Deposit card rate for the period the deposits have run with the Bank minus premature penalty of 1%. ii) No interest will be payable where premature withdrawal of deposits takes place before completion of the minimum period of 7 days.

APPROVAL FOR ACCORDING 2 WORKING DAYS VALIDITY PERIOD FOR QUOTING INTEREST RATE IN BIDDING PROCESS FOR BULK DEPOSITS (e-cir 1316 dt 04/01/2017) The revised validity period for quoting interest rates in Bidding Process for Bulk Deposits, as under: a) Branch would have to obtain the permission of Global Markets through L&TP Department, TBU prior to participation in every bidding irrespective of whether the quote is Card rate or DIR rate. b) Branch to issue Offer Letter quoting Card rate or DIR Rate as the case may be, in the Bidding for Bulk Deposits, stating the maximum validity period of 2 working days, excluding the date of Offer Letter quoting the BID. c) Operating Units should incorporate the validity period of the BID in the Offer Letter to the customer. d) In case, the BID is not opened within the validity period by the customer, the BID will automatically lapse as stated in the Offer Letter. e) In case, the ALCO changes the Card Interest Rates during the validity period of the aforesaid Bidding, Global Market would quote the Interest Rate, quoted in the Bidding, as DIR Interest rate, for the same amount and tenor, for maintaining, uniformity and to be Regulator compliant. f) Further, all DIR Rates would be advised to Social Media Department, GITC for placing the same on State Bank Times thus making the same available for all Operating Units. Engagement of Business Correspondents (BCs) Guidelines on Managing Risks and Code of Conduct: Audit of Individual BCs / CSPs: Standard Operating Procedure (e-cir 1294 dt 02/01/2017) Audit function: i. All Individual BCs / CSPs will be covered in an audit cycle of 24 months (covering 50% in 12 months on random selection basis).


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ii. The audit will be done by an official from nearby branches (other than link branch) or Manager (RB-FI) of adjacent Region on the Audit Report Format (ARF) enclosed to the above referred circular. iii. The report will be prepared in quadruplicate and submitted, one each, to the concerned link branch, RBO, B & O and the concerned ZIO. iv. Manager (RB-FI) in RBO will arrange for timely completion of Audit of the Region. Manager (RB-FI) in RBO will prepare an audit plan for audit of Individual BCs / CSPs of the Region duly approved by the Regional Manager of the RBO, and submit to Chief Manager (RB-FI) at B&O. Manager (RB-FI) will also submit a monthly report to Chief Manager (RB-FI) on status of audits vis-à-vis audit plan before 5th of succeeding month. v. Chief Manager (RB-FI) at B&O will ensure completion of the audits as per plan of the RBOs. Chief Manager (RB-FI) will consolidate the audit plan of the Administrative office and submit to Asst. General Manager (Outreach) at LHO. He will co-ordinate with the RBOs for timely completion of the audits. Chief Manager (RB-FI) will consolidate the monthly status of the audit vis-à-vis audit plan of the Administrative office and submit to Asst. General Manager (Outreach) at LHO. vi. Asst. General Manager (Outreach) at LHO will consolidate the audit plan of the Circle and will ensure timely completion of the audits of the Circle. Further, Asst. General Manager (Outreach) will consolidate the monthly status of audits of the Circle based on the reports received from A.Os and submit the consolidated position of the Circles to ZIO concerned and to I&MA Hyderabad, before 10th of the succeeding month. Submission of Compliance: i. Manager (RB-FI) of the Region, in co-ordination with Link Branch to ensure compliance of the irregularities pointed out in the audit report. The compliance remarks of the report will be submitted to concerned A.O. Chief Manager (RB-FI) of the A.O., will scrutinize the compliance

remarks submitted by the Region and forward the same with necessary confirmations to concerned GM, ZIO through DGM (B&O), for process and closure of the reports at ZIO. ii. The monthly status reports of the audits submitted by Chief Manager (RB-FI) shall also contain the status of submission of compliance remarks of the audits conducted up to the month, which will be consolidated at Circle level. Circles will advise the consolidated position of compliance remarks submission to I&MA, Hyderabad as part of monthly status report of the Audit of Individual BCs/ CSPs. Processing at ZIOs: i. ZIOs will process and close the reports based on the compliance remarks received from concerned Administrative Offices within four weeks from the date of report. ii. ZIOs will also follow-up with the A.Os for completion of the audits and submission of compliance remarks and closure of reports. iii. ZIOs will submit a monthly report on status of Audit/ receipt of compliance remarks/closure of the audits to I&MA, Hyderabad. INTER BRANCH TRANSFER SYSTEM (IBTS) MODIFICATION IN PROCESS FLOW OF TRANSACTIONS (e-cir 1366 dt 13/01/2017) Inter Branch Transfer System (IBTS) was introduced in the Bank vide Circular No. NBG/S&P-BRANCH CLEAR/23/2010-11 dated 15.03.2011, wherein under Process Flow at item numbers x, xi, xii and xiv, it is mentioned as under: x. Responding Branch shall decline the transaction with a suitable narration, if it is erroneously originated on them or if there is any discrepancy. At the time of declining the entry, system shall give a pop up massage ' Are you sure you want to decline this entry' and shall proceed further only on confirmation. No financial transaction shall be fired in case of transactions that are declined by the Responding Branch. xi. Entry originated may be corrected only on same day. From the next day of the entry originated no transaction can be reversed by the


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Originating Branch without the entry being declined by the Responding Branch. Further, no transaction can be amended by the Responding Branch in the CBS system. xii. Once the Responding Branch declines the transaction only Originating Branch can reverse the transaction in case of a wrong originating entry and re-originate the entries afresh, wherever required. xiv. In case of an erroneous originating entry by a Branch, a transcript of the narration that has been input by the declining Branch shall be shown to the originating branch as part of various fields on enquiry. It is thus very important that the narration is very specific and conveys the true picture to the Originating Branch. This shall enable the Originating Branch to reverse the entry and re-originate the transaction afresh, on another branch, if need be. While ‘reversal’ shall fire a financial transaction in the Originating Branch, ‘reoriginating’ shall not fire any financial transaction but update the System and the transaction shall be reflected against the Re-originated Branch, for necessary action. During ‘reversal’ of an Originating Credit at the Originating Branch, the amount shall be parked automatically by the System in an intermediary account viz., Inter Branch Transfer- Sundry Deposit Account. Originating Branch shall have to manually reverse such transactions and zeroise the IBT- Sundry Deposit Account, which is a reconciliatory type BGL Account. During ‘reversal’ of an Originating Debit at the Originating Branch, the amount shall be parked automatically by the System in an intermediary account viz., Inter Branch Transfer- Suspense Account. Originating Branch shall have to manually reverse such transactions and zeroise the IBT- Suspense Account, which is a reconciliatory type BGL Account. On review of the above process for reversal of an originating entry, it is observed that manual

intervention is required at three stages. With a view to (a) decreasing manual intervention(b) avoiding continuation of entries in IBTS (although in declined status) till its reversal and(c) avoid subsequent raising of entries on the same branch/ office by the originating branch with back dated effect; the appropriate authority has approved modification of the process as detailed hereunder: i. Entry originated may be corrected only on same day. From the next day of the entry originated no transaction can be reversed by the Originating Branch without the entry being declined by the Responding Branch. Further, no transaction can be amended by the Responding Branch in the CBS system. ii. Responding Branch shall decline the transaction with a suitable narration, if it is erroneously originated on them or if there is any discrepancy. At the time of declining the entry, system shall give a pop up message ' Are you sure you want to decline this entry' and shall proceed further only on confirmation. Immediately upon declining of an entry by the Responding Branch, a financial transaction shall be fired and amount parked automatically by the system in the intermediary accounts at the Originating Branch as under: a) For credit entries: IBT-Sundry Deposit account (2399777) b) For debit entries: IBT-Suspense account (2399778) iii. Originating branch shall have to manually reverse such transactions and zeroise the IBT-Sundry Deposit Account/IBT-Suspense Account, which are reconciliatory type BGL accounts. 3. Further, for prompt responding of high value IBTS entries and to reduce the number of entries being declined by the Responding Branch for want of relevant documents, facility of auto generation/ sending of SMS/email to Responding Branch has also been approved as under: a) For Originating entry of Rs.5 Lac and above put through by the Originating Branch, an auto generated email message will be sent for


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information and necessary action to the Responding Branch. The e-mail message will contain full details of the IBTS transaction and the contact numbers as well as e-mail IDs of dealing officials & Branch Manager of the Originating Branch. b) For Originating entry of Rs.1 crore and above put through by the Originating Branch, in addition to the e-mail message an auto generated SMS will be sent to the mobile number of the Branch Manager of the Responding Branch for their immediate action. The SMS will contain brief particulars of the IBTS transaction and the contact numbers of dealing officials & Branch Manager of the Originating Branch. 4. The above functionality is expected to roll out in production on 14.01.2017. After promotion of this modification, Originating Branch will not be able to (a) Reverse and (b) Re-originate the IBTS transactions. These two options will be disabled from CBS menu from 15.01.2017. Aadhaar Seeding in Multiple Bank Accounts (e-cir 1695 dt 31/03/2017) As per extant instructions, Aadhaar seeding is done in one Bank account. In view of revised instructions received from Department of Financial Services, GoI, all accounts of customers are to be seeded with Aadhaar. 2. The matter has been examined by IBA in the meeting held on 6th March, 2017 and it has been decided to link Aadhaar number with multiple accounts of the customers. However, mapping of Aadhaar at NPCI will be done only for primary

account. Financial Inclusion Savings Bank cum Overdraft - Mudra Loan upto Rs.5000/- in PMJDY accounts : Modification in interest rate (e-cir 58 dt 13/04/2017) Please refer to e-Circular No. RABG/RB-AC/13/2014-15 dated 9th February, 2015. As per RBI Guidelines, all loans sanctioned on or after 01.04.2016, are to be either on Fixed Rate or Marginal Cost of Lending Rate (MCLR) linked

Floating Rates. Hence, it has been decided by the appropriate authority to link the interest rate for SBOD (Mudra Loans) in PMJDY accounts with one year MCLR plus a spread of 3%. Accordingly, the interest rate has been revised to One year MCLR (presently 8%) plus 3% i.e., effective rate at 11% w.e.f. 01.04.2017. New System for TDS Centralisation - TDS Reporting System (TRS) (e-cir 27 dt 05/04/2017) a) As a move towards centralization of TDS returns of the Bank, a new tool TDS Reporting System (TRS)is developed to manage TDS deducted by the various source systems as below: i. TDS on Interest on Deposits in Core Banking Solutions (CBS) ii. TDS on Vendor Payments in Vendor Payment Systems (VPS) iii. TDS on Salary Payments & Staff Pension in Human Resource Management System (HRMS) iv. TDS on Pension Payments in Central Pension Processing Centre (CPPC) b) TRS shall integrate with CBS, VPS, HRMS &CPPC and these source systems will share the data with TRS on regular basis. On the basis of tax deduction effected on payments made through aforesaid source systems, TRS shall prepare the monthly TDS remittance and quarterly TDS returns under Central TANs. c) The TDS remittance, generation of returns and filing of returns will be done centrally at the Corporate Centre. d) TRS application will be accessible to all the SBI branch through CBS B@ncslink under common login apps. Branches can also view TDS deductee details and TDS remittance in TRS. e) Branches/offices need to ensure entry of the correct details related to customers/ vendors/ employees/pensioners in the respective source systems, so that appropriate tax is deducted. FEMA AUDIT : (e-cir 238 dt 03/06/2017)


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FEMA Audit has been delinked from RFIA wef 01.04.2016 by establishing a separate FEMA Audit Wing under Central Audit Unit (CAU) for focused attention. I) FEMA Audit Universe: ▪ The FEMA audit plan for the next year shall be prepared based on the categorization of Forex branches by GMU-K, during second half of each financial year. ▪ All the branches, categorized as ‘A’ & ‘B’ by the GMU (K) as per their half yearly review of categorization of Forex business conducting branches, will be included n the current year audit plan and audited under FEMA audit. ▪ Regarding Category C branches, Forex areas will be covered under RFIA through the respective ZIOs. ▪ Audit of branches linked to TFCPC are excluded from FEMA audit and consolidated FEMA audit at TFCPC will be done. ▪ Forex related transactions (other than trade finance related activities) conducted at branches linked to TFCPC will be verified by RFIA auditors on the lines of category ‘C’ branches. II) Periodicity of the Audit: ▪ All branches in CAG / MCG / TFCPC will be audited once in a year. ▪ The Periodicity of the FEMA audit will be in line with the RFIA, based on the Risk profile and Risk rating done in the RFIA for category A & B branches. ▪ NBG Branches, identified by the MD (NBG), for conducting Merchanting Trade Transactions will be audited at half-yearly intervals (one along with annual FEMA audit and another after 6 months from the date of FEMA audit. III) Areas covered: FEMA audit will be done on the following 8 major parameters for 1000 marks. Sl no Parameter Marks 1 Operational Aspects 50 2 Imports 230 3 Exports 250 4 Forward Contracts 60 5 Foreign Guarantees 80 6 ECBs 80 7 Remittances 150

8 Other Areas 100 Total 1000

IV) Score Integration i) CAG/MCG/ TFCPCs The scores / weightages have been revised giving more weightage to CAG/MCG Branches and TFCPC, in view of the number of transactions and volume of business handled. CAG / MCG: 100 (from existing 50 Marks) TFCPC: 500 (from existing 400 marks) ii) SME Intensive and Branches not linked to TFCPCs: SME intensive NBG branches, not linked to TFCPC, separate weightages have been given, with scores ranging from a minimum of 60 to maximum of 100. iii) All other branches For all Other Group I / Group II / Group III branches, the integration of FEMA score in the RFIA will be @ 50/30/20 respectively. V) Time norms for Submission of Compliance Remarks and Processing: The Compliance reports received from Circles / SBUs will be processed at FEMA audit wing. i) Closure of the reports will be within 8 weeks from the data of Audit report. ii) Compliance remarks shall be submitted by the branches within 5 weeks from the date of audit report to the Controller. iii) Controllers not below the rank of General Managers shall submit the vetted compliance remarks to the GM (CAU) within one week from the date of receipt of the report from the branches. iv) Processing period for FEMA wing in CAU is 2 weeks from the date of receipt of the Compliance Remarks. v) All NBG branches shall forward the compliance remarks through the GM of the net work concerned. vi) In case of MCG branches, the CRs are to be forwarded through the GM of the concerned MCRO and in case of CAG branches, it shall be submitted through the CGM (CAG) of the concerned branch. VI) Penalty for delayed submission:


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Penalty marks of 5% of FEMA weightage score is proposed for delayed submission of Compliance Remarks, across board, as under: For CAG / MCG/ Spl outfits: 5 % of 100 Marks For TFCPCs’: 5 % of 500 Marks For other Group I branches: 5 % of 50 Marks For Group II branches: 5 % of 30 Marks For Group III branches: 5 % of 20 Marks VII) Report Closure norms i) The FEMA Audit compliance reports will be closed with 95% of compliance in HR/MR and 90% overall satisfactory compliance. ii) The Compliance remarks for branches headed by AGM & below will be closed by the GM (CAU). iii) The compliance remarks for branches headed by DGM and above will be closed by CGM (IA-II). Implementation of RBI Guidelines on Central Know Your Customer Registry (CKYCR) (e-cir 330 dt 30/06/2017)

As per Reserve Bank of India guidelines on Central Know Your Customer Registry (CKYCR), the data (Customer Information, Photograph, KYC documents) in respect of all account based relationships established by the Bank are required to be uploaded on CKYCR portal within T+2 days of such establishment of relationship. Account based relationship includes all types of deposit accounts, loan accounts, non-fund based accounts like Bank Guarantee, Letter of Credit, etc. SARFAESI ACT 2002, SECTION 3 (1) B – REQUIREMENT OF NET OWNED FUND (NOF) FOR ASSET RECONSTRUCTION COMPANIES. (e-cir 327 dt 30/06/2017) Reserve Bank of India, in order to prevent the affairs of any Securitization Company or Reconstruction Company from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such Securitization & Reconstruction company, issue guidelines and directions relating to registration, measures of asset reconstruction, functions of the company, prudential norms, acquisition of financial assets and matters related thereto.

RBI, now through its notification no. DNBR.PD (ARC) CC. No. 03/26.03.001/2016-17 dated April 28, 2017, directed that keeping in view the greater role envisaged for ARCs in resolving stressed assets as also the recent regulatory changes governing sale of stressed assets by banks to ARCs, decided to fix the minimum NOF requirement for ARCs at Rs. 100 crore on an ongoing basis, w.e.f 28.04.2017. LEGAL AUDIT (e-cir 242 dt 05/06/2017) Regulatory Prescription Reserve Bank of India vide their Circular No. DBS.FrMC.BC.No.7/23.04.001/2012-13 dated 07.06.2013 advised all the banks to subject the title deeds and other documents in respect of aggregate credit exposures of Rs 5 crore and above to periodical legal audit and re-verification of title deeds with relevant authorities as part of regular audit exercise till the loans are fully repaid. Coverage: All Loan and mortgage related documents in respect of accounts with aggregate credit exposure of Rs.5.00 crore (FB+NFB) and above shall form the Audit Universe for Legal Audit. Accounts migrated to SAMG shall be excluded from the purview of Legal Audit, as enforceability certificates are required to be obtained in such cases. Periodicity and Scope: a) It is envisaged that the Legal Audit be conducted prior to Credit Audit / Combined Audit / RFIA so that the observations of the Legal Audit may be incorporated in the respective audit reports. It will thus form an integral part of the respective Credit Audit / RFIA report. [After merger of Associate Banks with SBI, these instructions will also apply to eligible accounts which will become part of our books.] b) In case the Legal Audit was conducted subsequent to RFIA/Credit Audit, the observations of Legal Audit will be considered for the next Credit/RFIA audit only. c) Legal Audits will be conducted prior to the ensuing RFIA / Combined Audit for all eligible accounts i.e. for both existing accounts where there has been a change in the facilities /


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securities and new accounts opened subsequent to the previous Legal Audit. d) Accounts which have been subjected to Legal Audit and in which there are no changes either in documents or securities will be subjected to subsequent Legal Audit only after three years. e) As the conducting of Legal Audit is a direction from RBI, it is expected that all the banks will implement the same. Legal Audit in respect of the accounts availing finance under Consortium Arrangement shall be done by our branches, where we are the Lead Bank and the original documents (Loan & Mortgage) are held by us. In accounts where another Bank is the Lead Bank, our branch shall take up the matter with the Lead Bank / the bank holding original mortgage documents for conducting Legal Audit and furnish a copy of their Legal Audit report to our RFIA /Credit auditor. f) In case of MBA, Legal Audit of Loan Documents shall be arranged by our branch, while Legal Audit of Mortgage Documents shall be arranged by the bank holding the original documents relating to the properties charged. The relative Legal Audit report obtained from the respective banks shall be furnished to the RFIA /Credit Auditor. g) To ensure quality of the Legal Audit, 10% of accounts so audited will be checked by RFIA / Credit Auditors on random sample basis. Early Sanction Review (ESR) / Loan Review Mechanism (LRM): Time Norms for Closure of Branch ATRs (e-cir 244 dt 05/06/2017) it has been decided by the appropriate authority to specify the following time norms for submission of ATRs for both ESR and LRM review reports pertaining to different verticals . NBG Branches: ATRs of NBG branches shall be submitted to the respective DGM (B&O) through their Controllers. DGM (B&O) shall submit the ATRs to GM, ZIO of their respective zone duly recommending for closure as under: 1) Submission of ATR by the Auditee Unit to DGM (B&O) through RBO: 15 days 2) Re-submission of ATR in case of Return of initial ATR: 5 days 3) Submission of Recommendations for closure by DGM (B&O) to respective GM, ZIO: 15 days

4) Re-Submission of Recommendations for closure by DGM (B&O) to respective GM, ZIO based on resubmitted ATR: 5 days 5) Closure of ATRs by GM, ZIO / Return: 10 days 6) Closure of Resubmitted ATRs: 10 days STAFF DEPOSIT ACCOUNTS PROVISION FOR PAYMENT OF ADDITIONAL INTEREST RATE (e-cir 271 dt 15/06/2017) As per extant guidelines, mentioned in Book of instructions Volume-I, Chapter 3, Para 13, Page no 88 & 89, one percent additional interest rate is being paid to all members of the Bank’s staff and its pensioners on their deposits, provided the deposits represent the depositors’ bonafide savings. Further, one percent additional interest rate is payable in all deposit accounts to such employees who have superannuated at the age of 60 years, but they are not eligible for pension REAL ESTATE (REGULATION AND DEVELOPMENT) ACT 2016 (RERA) OPENING OF SEPARATE CURRENT ACCOUNT FOR REALTORS (e-cir 273 dt 15/06/2017) RERA guidelines will be applicable both for Residential and Commercial Real Estate, where area of land proposed to be developed exceeds 500 sq. mtr. or the number of apartments proposed to be developed exceed 8 inclusive of all phases. Promoters will approach Branch for opening a Separate Current Account for each Project for depositing 70% of the proceeds from Investors/ Buyers as per provisions of the RERA Act 2016. No cheque book will be issued in this account. Internet banking facility with viewing rights only may be given. Timelines for Submission of Agency Commission Claims (e-cir 298 dt 21/06/2017) Agency Banks to claim their agency commission within 90 days from the end of the quarter for


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which the commission is being claimed, effective from 30.06.2017 and onward. Discontinuation of reporting of lost FIRC to FEDAI and issuance of duplicate FIRC for current account remittances (e-cir 307 dt 23/06/2017) With the introduction of EDPMS and handling of remittances through IRM issuance of FIRC in physical form for export related inward remittances is no longer in vogue. It is therefore decided by FEDAI that Banks should henceforth stop reporting of lost/ misplaced FIRCs and issuance of Duplicate FIRCs for current account remittances. AML/CFT MEASURES SUSPICIOUS TRANSACTIONS IN SB A/C OF FOREIGN STUDENTS (e-cir 316 dt 28/06/2017) To safeguard the bank and the bank's customers against such fraudsters, the following risk mitigation measures must be put in place while opening/operating accounts of foreign students: (I) correct feeding of customer's occupation and Nationality Code in CBS at the time of account opening for accurate MIS and scrutiny. (ii) Obtain local address proof of the student within a period of 30 days of opening the account, verify them and incorporate the data in CBS invariably. (iii) Branch operating functionaries should recheck customer's occupation and Nationality Code of existing foreign students and update their above data in CBS. (iv) Partial freezing of a/c operation in case expiry of visa. (v) Regular monitoring of the transactions of foreign students at various levels on the basis of threshold limit fixed by the branch and nature of Inland Remittance. (vi) Extra Due Diligence (EDD) should be exercised by the branch if inland remittances in form of cash deposit or transfer from non home locations on frequent intervals is observed. Branches should report without fail any suspicious transactions to AML/CFT Department, Jaipur in terms of e Circular no. CFO/AMLCFT/ 26/201516 dated 11/01/2016.

Payment of Agency Commission for Government receipts (e-cir 378 dt 07/07/2017) RBI has directed through the notification that a single challan (electronic or physical) should be treated as single transaction only and not multiple transactions, even if the challan contains multiple major heads/sub major head/minor head of accounts that will get credited. AUDIT OF OUTSOURCED ACTIVITIES (OSA) TIME NORMS FOR CLOSURE OF REPORTS (e-cir 417 dt 15/07/2017) Outsourced Activities Audit has been rolled out in March 2016 by I&MA Department. It has now been decided by the appropriate authority to increase the time norms for closure of reports from the existing 4 weeks to 10 weeks with following norms for movement of compliance remarks. Time Norms 1. Submission of compliance remarks by Business Unit (Owner Dept of the vendor i.e. RBO/ LHO Dept/ CC Dept/ GITC Dept) to their controllers. Inclusive of supplementary compliances sought from the Vendor: 6 weeks 2. Submission of compliances remarks by controllers with due confirmations to GM, ZIO/ GM (CAU) I&MA for closure: 2 weeks 3. Closure of reports at ZIO / CAU, I&MA Inclusive of supplementary compliances sought from the Business Unit: 2 weeks Total time frame for closure of reports: 10 weeks BMMC (BRANCH MANAGER’S MONTHLY CERTIFICATE) e-cir 437 dt 19/07/2017) The revised format comprising a total of 73 certificates to be submitted at Monthly/ Quarterly / Half Yearly periodicity as mentioned hereunder, will now have to be certified by the Branch Manager: A) MONTHLY CERTIFICATES: i. 36 certificates to be submitted by the Branch Manager on a monthly basis (Applicable for all branches Pan India).


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ii. Trade Finance Related Certificates: A separate section comprising 17 Trade Finance related certificates have to be submitted by the Branch Managers of branches handling Trade Finance business along with the Monthly Certificates {item (i) above}. B. QUARTERLY CERTIFICATES: 9 certificates are included in this group. These certificates are to be submitted as on 30th June, 30th September, 31st December, and 31st March along with the Monthly Certificates. C. HALF YEARLY CERTIFICATES: 11 certificates are included in this group. These certificates are to be submitted as on 30th September and 31st March along with Monthly and Quarterly Certificates. It has also been decided to discontinue maintenance of the BMMC Register in the present form, as this was more relevant for manual operations. In this connection, an online functionality (e-BMMC) has been developed with the help of IT Department for submission of BMMC by Branch Manager, scrutiny of BMMC by Controller, verification of BMMC by Auditors (Circle, RFIA, etc.). The following activities can be performed through e-BMMC: (i) Submission of BMMC online by Branch Manager. (ii) Scrutiny of BMMC by Controller. (iii) Remarks / Query can be raised by Controller through the application. (iv) Submission of the replies to the Controller’s remarks by Branch Manager. (v) Final closure of BMMC by Controller. (vi) Archival / Retrieval facility (BMMCs for the previous 60 months can be stored / retrieved). (vii) Verification of BMMC by Auditors visiting the Branch. Extension of Submission Date: As hitherto, BMMC for a particular month has to be submitted by the 5th of the following month. However, Nodal Officers can extend the submission date (in respect of the ongoing BMMC month only), for a particular Branch/Region/Administrative Office/ Network, in case extension of date is required due

to unavoidable /exceptional circumstances, on receipt of a copy of the approval of the Controller concerned / competent authority. (e.g. submission of BMMC for the month of July 2017 can be extended up to any date in the month of August 2017 only i.e. between 6th to 31st August 2017). IT Asset Management (ITAM) Solution (e-cir 445 dt 20/07/2017) ITAM solution helps the Bank to create a framework and a set of processes for strategically tracking and managing the physical, licensing, compliance and contractual aspects of all IT Assets throughout their life cycle. The IT Assets include Hardware, Software and Network Assets of the Bank. ITAM solution was implemented at the Bank level w.e.f. 01.10.2015. ITAM solution is used for the following activities: i) Centralized repository of all software and hardware installed on all desktops / servers and Network devices across the Bank ii) Licensing management for all software products iii) Consolidated repository of all the IT related contracts across the Bank; providing auto alerts / notifications on expiry / renewal of Contracts across the Bank iv) Monitoring end of life, end of support and extended end of support information for all operating system(s) and software products enabling proactive planning v) Patch Management for Microsoft Windows Server and Desktop Operating systems as well as other operating systems like Unix / Linux etc. vi) Issuance of purchase order (PO), workflow of financial approvals and centralized tracking of PO. vii) Proactive control on use of non-standard Products / Software viii) Remote desktop management centrally from GITC. ix) Mapping of IT Assets with locations and contracts EARLY SANCTION REVIEW (ESR)/ LOAN REVIEW MECHANISM (LRM): AUTHORITY STRUCTURE FOR RECOMMENDING CLOSURE OF ATRs (e-463 dt 26/07/2017)


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NBG Branches Submission of ATRs by the auditee unit to DGM (B&O)> Submission of Recommendations for closure by DGM (B&O) to respective GM (ZIO)> Closure of ATRs by GM ZIO. MCG Branches Submission of ATRs by the auditee unit to Controller > Submission of Recommendations for closure by Controller to GM (CAU) > Closure of ATRs by GM (CAU) CAG Branches Submission of ATRs by RMs/AMTs to GM & RH of the Branch > Submission of Recommendations for closure of ATRs by GM &RH to I&MA, subject to obtaining approval from CGM (CAG) in respect of CAAs rated as HR & where individual score is less than 50% of the maximum score > Closure of ATRs by CGM (IA-II) PFSBU Submission of ATRs by respective Sector Heads to CGM (PFSBU) > Submission of Recommendations for closure by CGM (PFSBU) to I&MA > Closure of ATRs by CGM (IA-II) Operational Risk Analytical Application (ORAA) Introduction of Incident Management Module (IMM) for Reporting of financial / non-financial incidents such as Internal Loss Data, Near Miss Events & External Loss Data, etc. (e-cir 475 dt 28/07/2017) IMM, a real time three layered approach, provides functionality to capture, review and approve incidents across all branches / processing centres / offices. a. At first layer, Branch / Processing Centre / Office (known as reporting unit) will create the incident with basic details. b. At second layer, it will be followed by Review of the incident and conveying financial approval & BGL account number, if required, by Controller. (Ownership and maintenance of IMM at second layer will vest with CM (C&R) at RBO, CM (GB) at AO in NBG and other designated officials as per manual in respect of other establishments of NBG, CAG, MCG, SAMG and GMU,GITC and Corporate Centre) c. At third layer, enrichment and eventual approval of the incident by OR Managers at LHO,

Business and Support Groups will lead to storage of the events and losses / recovery, as the case may be, into IMM. Thus, the structured approach towards operational risk incidents and management thereof will bring in an overall integrity besides standardization of collection and accounting process. Goods and Service Tax (GST) Procurement of Goods/Services by the Bank Input Tax Credit (ITC) (e-cir 556 dt 11/08/2017) a) Procurement of office Assets/ procurement of assets by the employees for residential purposes from registered vendors b) Procurement of Services by the employees: Bills for services procured by the employees for discharging official duty (e.g. mobile bill, hotel bill, air ticket) should be in the name of the Bank rather than the individual. Otherwise Bank will not be able to claim the Input Tax Credit for the same. c) GSTIN of the Bank on all invoices: Invoices for all the procurements as mentioned above should be in the name of the Bank and contain the Bank’s GSTIN of the respective State/UT where branch is located. Otherwise Bank will not be able to get the Input Tax Credit for the same. Traditional Remittance Instruments -Draft/ IOI/ Banker Cheques (BC): Introduction of Centralized Payment System of Old Drafts/Banker Cheques (e-cir 613 dt 31/08/2017) it is observed that old instruments, issued before CBS cannot be validated in CBS, there have been several instances of wrong/double payments. To mitigate the risk of wrong/double payments and to ensure payment to the rightful holders of the instruments in respect of old Drafts/BC, a new centralized payment system has been approved by the competent authority. Under this system, branches will not be able to pay these old instruments through CBS with effect from 1stSeptember, 2017. Instead, these instruments will henceforth be sent to IT Reconciliation & Settlement (Non-Channel) Department, GITC, who will pay these instruments


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after verifying their genuineness on a stand-alone Recon System. The old remittance instruments are the instruments under Category-A issued before roll out of IOI system i.e., all inter-branch drafts (IBD), AGCL Drafts, ABSOT Drafts (Drafts issued amongst e-Associate Banks) and BC issued before the cutoff date will henceforth be paid/handled by IT R&S NC Dept. GITC. Category (A): Instruments issued prior to 18/09/2008: To be handled by GITC Category (B): All types of Drafts and Banker Cheques issued in form of IOI from 19/09/2008 onwards are Category B instruments: To be handled by branch CURRENCY CHESTS PROVISION OF REMOTE ALARM/ CALLING BELL (e-cir 670 dt 18/09/2017) Operational Risk Management Department, as a part of Advanced Measurement Approach has suggested to install a Remote Alarm/ Calling Bell inside the Currency Chests with ‘button to press’ inside and the bell outside to be useful in the event of any employee locked inside the strong room inadvertently and enable them to press the Alarm Bell, so that it can be heard outside. Accordingly, competent Authority has approved for installation of a Cordless Bell. The push button (which operates from batteries) will be kept inside the Currency Chest and the bell (which work on power supply) near the ventilator so that there is no obstruction and the bell functions effectively whenever required. Banking facility for Senior Citizens and Differently abled Persons (E-CIR 1022 dt 22/11/2017) Reserve Bank of India has advised banks to put in place appropriate mechanism with the following specific provisions for meeting the needs of such customers so that they are able to avail of the bank’s services without difficulty: (a) Dedicated Counters/Preference to Senior Citizens, Differently abled Persons. (b) Ease of submitting Life Certificate.

(c) Cheque Book Facility. (d) Automatic conversion of status of accounts. (e) Additional Facilities to visually impaired customers. (f) Ease of filing Form 15G/H. (g) Door Step Banking.